Silver prices experienced a notable decline of 1.41%, closing at Rs 262,958. This downturn was influenced by a strengthening US dollar and increasing anticipations that the Federal Reserve may sustain elevated interest rates for an extended period. The dollar index strengthened to 99.4, its highest level in nearly two months, following a series of robust US labour market indicators that bolstered confidence in the economy. Data indicated that job openings increased in April, reaching their highest level in nearly two years, while layoffs decreased, underscoring the ongoing strength in employment conditions. Market participants are currently paying close attention to the forthcoming nonfarm payrolls report for additional insights into the Federal Reserve’s monetary policy trajectory.
Furthermore, heightened oil prices, influenced by the ambiguity surrounding US-Iran negotiations, have intensified inflation worries, thereby reinforcing anticipations of a stringent policy approach. Fundamental developments in the silver market exhibited a mixed landscape. India, recognised as the world’s largest consumer of silver, has implemented stricter import regulations by categorising silver grains, powders, bars, and the majority of semi-manufactured forms as restricted. This change mandates that importers obtain prior authorisation from the Directorate General of Foreign Trade.
The initiative seeks to limit imports and alleviate pressure on the rupee following a historic expenditure of $12 billion on silver imports during FY2025/26. While reduced imports from India may exert pressure on global demand, constrained domestic supplies could elevate local premiums. In contrast, China’s silver imports surged to a record 836 metric tonnes in March, nearly three times the historical average, driven by robust retail investment demand and proactive stockpiling by the photovoltaic sector in anticipation of impending tax policy changes. Meanwhile, silver holdings in London vaults decreased by 0.1%, totalling 27,454 tonnes at the end of April.
Technically, silver is experiencing renewed selling pressure, evidenced by an 8.25% increase in open interest to 11,492 contracts, coinciding with a notable decline in prices. Immediate support is identified at Rs 260,895, with additional downside potential extending toward Rs 258,830. Resistance is positioned at Rs 266,260, and a breakout above this threshold could initiate a movement toward Rs 269,560.